Bank of India vs RNA Corp. Pvt. Ltd.

Per: Shri Bhaskara Pantula Mohan, Member (J)

This is an application filed under Section 7 of the Insolvency and Bankruptcy (I&B) Code, 2016 by Bank of India (hereinafter called the 'Petitioner') seeking the Corporate Insolvency Resolution Process against RNA Corps. Pvt. Ltd. (hereinafter called the 'Corporate Debtor') on the ground that the Corporate Debtor has committed default in making the repayments of the term loan.

The petitioner is a Bank incorporated on 07/09/1906 having Identification Number U99999MH1906PLC000243 and filed this petition by its authorised person Mr. Rajender Kumar, Chief Manager of Andheri Large Corporate Bank whereas the Corporate Debtor is a company incorporated on 13/04/2010 bearing CIN U70102MH2010PTC202038, having Authorised Share Capital of Rs. 1,12,00,00,000/- and Issued, Subscribed and Paid-Up Capital of Rs. 1,11,11,00,000/-.

The counsel for the petitioner submits that a Corporate Term Loan of Rs. 75,00,00,000/- was granted to the Corporate Debtor vide Sanction Letter dated 24/10/2013. The said amount was also disbursed by them in favour of the Corporate Debtor. The counsel for the petitioner mentioned that there was Deed of Guarantee entered into dated 29th October 2013 and 9th December 2013. There were also registered mortgage deeds dated 29th October 2013, 10th December 2013 and 16th December 2013.

The counsel for the petitioner also submits that the date of default and that of declaration of NPA of the Corporate Debtor is 31/12/2014. The principal outstanding amount as on 10/02/2019 amounts to Rs. 40,58,23,360.83/- whereas the interest is Rs. 34,81,43,071.74/-, penal interest is Rs. 5,30,37,157.27/- and other legal expense etc. is amounting to Rs. 3,72,775.00/-. Therefore, the total amount claimed is Rs. 80,73,76,364.84/-.

The petitioner in support of his contentions made has annexed the following documents:

The Corporate Debtor on the other hand denied all the contentions, submissions and allegations made by the petitioner on the ground that they are false, incorrect and baseless. However, the Corporate Debtor does not deny the fact that the money was borrowed by them from the petitioner.

The Corporate Debtor mentioned that they had requested the petitioner vide their letter dated 05/05/2015 for issuance of conditional NOC in favour of Kotak Mahindra Bank Ltd for release of collateral property, Flat No: 1701 admeasuring 5450 sq. ft. in RNA Mirage, Worli, Mumbai which was not considered to be favourable by the petitioner and hence rejected vide letter dated 28/07/2015.

Further the Corporate Debtor has also annexed the notice dated 27/07/2015, sent to them by the petitioner wherein the demand for initiating the process for Identification as "Wilful Defaulter(s)" as a last chance or else the right will be exercised by initiating proper proceeding.

The counsel for the Corporate Debtor contended that the Power of Attorney annexed by the petitioner does not give any authority to Mr. Rajendra Kumar to file petition against them. Moreover, the petitioner has failed to annex board resolution in support of the said Power of Attorney and hence he is not a properly authorised person as required under the rule 2(6) of the NCLT rules read with Section 432 and 176 of the Companies Act, 1956 to affirm the petition and hence the present petition is not maintainable.

Further it was contended by the Corporate Debtor that the petition is defective for want of Form II in the copy of the petition as it is a requisite condition under Section 7 of the IB Code, 2016.

The Corporate Debtor mentioned that they were regular in making payments to the petitioner but due to the death of Mr. Anil Kumar Aggarwal and also due to the slump in real estate market, their business was affected and the petitioner instead of acting like a prudent banker issued legal notice to them even when they were informed by the Corporate Debtor about the downturn in the market condition and were requested time to make repayments.

The Corporate Debtor submitted that vide its letter dated 10/12/2015, it had proposed to repay the credit facilities in instalments and accordingly, payments of Rs. 7,50,00,000/- were made by them in instalments.

Further the Corporate Debtor mentioned that in the mean time the petitioner took symbolic possession of the secured assets of the Corporate Debtor and its directors. Against this action of the petitioner, the Corporate Debtor had filed Securitisation Application No: 91 of 2016 before the Debt Recovery Tribunal and infact thereafter the Corporate Debtor had made payments towards the outstanding dues and the same were accepted by the petitioner.

We have heard both the parties at length, taken all their submissions into account and perused the documents and evidences placed on record by them. It has become very clear that there was Loan Agreement between both the parties which is not denied by both of them. A total amount in default is Rs. 80,73,76,364.84/- including interest, penal interest and other expenses. Therefore, there is no doubt that both the parties shared a relationship of creditor and debtor.

The Counsel for the Petitioner has apprised us of the fact that the Corporate Debtor had deposited various amounts against the loan taken. The latest payment made by the Corporate Debtor was on 04.04.2016 for Rs. 19,400/-. Therefore, it is clear that this Petition has been filed within limitation, because of the fact that from the first date of default, the Corporate Debtor has been making regular payments to the Petitioner against loan amount.

Herein it is important to note that a mere verbal acknowledgement without any evidentiary document does not extend the limitation period, but any payment made by the debtor or any acknowledgement of the debt by the debtor in his books of account is a sufficient cause to extend the limitation period as per section 18 of the limitation act. In the present case payments have been made regularly even after the first date of default up until April, 2016 and this petition has been filed in February, 2019 making this petition well within the limitation period.

The Corporate Debtor has prayed to dismiss this petition and has stated that the said petition is incomplete due to want of Form II. But later the petitioner has submitted copy of Form II and therefore, the matter can be very well proceeded.

The technical objection raised by the Corporate Debtor regarding the absence of a Board Resolution in the petition holds no water, because this issue has already been settled by the National Company Law Appellate Tribunal in the case of Palogix Infrastructure Private Limited VS ICICI Bank Limited (Company Appeal (AT) No. 30 of 2017), the Hon'ble NCLAT in this case held that:

It is important to point out that the abovementioned defence is the sheet anchor of the argument of the Corporate Debtor. However, the same cannot be of any assistance to the Corporate Debtor since this issue has already been settled by the NCLAT and the officers who have filed this petition are fully empowered to do so. Furthermore, the petitioner has already filed a Power of Attorney in the name of Mr. Rajender Kumar, Chief Manager of Andheri Large Corporate Bank.

The requisite conditions for admission of a Section 7 petition are found to be fulfilled inhere. There is debt and default on the part of the Corporate Debtor which they themselves have not denied.

This Adjudicating Authority, on perusal of the documents filed by the Creditor, is of the view that the Corporate Debtor defaulted in repaying the loan availed. In the light of above facts and circumstances, the existence of debt and default is reasonably established by the Financial Creditor as a major constituent for admission of a petition under section 7 of the I&B Code. Therefore, the Application under sub-section (2) of Section 7 is taken as complete, accordingly this Bench hereby admits this Petition prohibiting all of the following of item-I, namely:

Accordingly, this Petition is admitted.

The Registry is hereby directed to communicate this order to both the parties and the Interim Resolution Professional immediately.